NY Governor signs bill to attempt to curb illegal sale of tax-free cigarettes to non-Indian purchasers..

December 16, 2008 - Legislation signed by the Governor of New York David Patterson makes cigarette manufacturers and stamping agents accountable for sales of untaxed cigarettes by Indians to Non-Indians.

Under Article 20 of the New York State Tax Law, cigarettes sold by Indian retailers to non-Indians must be taxed. The bill signed by Governor Paterson today will prohibit cigarette manufacturers from selling unstamped cigarettes to stamping agents who have not provided them with a certification, under penalty of perjury, that the cigarettes will not be resold in violation of Article 20. Agents must provide the Tax Department with any certification they give to a manufacturer.

To the extent that the tax is undermined, our efforts to fight smoking are also undermined.”

“This law has not been adequately applied for far too long giving non-Indians easy access to tax-free cigarettes both on the reservations and over the internet,” said Governor Paterson. Although cigarettes sold by agents to retailers for re-sale to non-Indian purchasers must bear tax stamps, the State has, for many years, adopted a policy of non-enforcement, and unstamped cigarettes continue to be sold by agents to Indian retailers who sell them to non-Indians at discount prices.

The New York State Department of Taxation will have 60 days to issue a certification form and prepare to receive the certifications that will be submitted. Governor Paterson signed bill A11258A/ S 8146-B at a ceremony in Utica.

The Assembly held off sending the bill to Paterson, who hoped that he’d be able to negotiate a deal with the Seneca Indian tribe. However, the negotiations did not yield an agreement. Paterson has said before that he believes this issue will end up in court, and said at a public leaders’ meeting in November, when pressed by Republicans to sign the bill, that the state may not see revenue for some time.

Reference: Paterson signs indian cigarette law by Irene Jay Liu, timesunion.com, 12/15/2008.